Enforcing the Competition Law in Namibia A Toolkit - cuts ccier

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Box 30: The Graphite Electrodes Cartel and its Effects onDeveloping Country Steel ProducersGraphite electrodes are used primarily in the production of steel in electricarc furnaces. In a highly concentrated world market, two firms (one Germanand one American) had a combined market share of roughly two-thirds atthe beginning of the 1990s. Japanese producers supply a considerable partof the remainder, with modest contributions from a number of smallerproducers based in certain developing countries, principally India and China.All of the major producers in this market operate production facilities in anumber of countries, including developing countries such as Brazil, Mexico,South Africa, Russia, and Poland, and sell their products throughout theworld.The OECD estimates that, “the cartel affected US$5-7bn in sales worldwide.Throughout the world, the cartel resulted in price increases fromroughly US$2000 per metric tonne to US$3200-US$3500 in variousmarkets”.CROSS-BORDER ISSUESThe only direct estimate of pecuniary harm caused to purchasers indeveloping countries comes from the KFTC, which in March 2002 convictedsix graphite electrode manufactures from the US, Germany, and Japan.According to KFTC, Korean steel manufactures “imported graphiteelectrodes amounting to US$553mn from the six companies from May 1992to February 1998, and during the period the import price increased from anaverage of US$2,225 per ton in 1992 to an average of US$3,356 in 1997(about 48.9 percent price increase). The damage incurred by the companiesimporting graphite electrodes is estimated at approximately US$139mn.Korea’s major industries such as automobile and shipbuilding that consumemuch steel were also influenced by this international cartel”.Source: Evenett, Simon J. (2003), Study on issues relating to a possible multilateralframework on competition policy, WTO Document No. WT/WGTCP/W/228Also a type of collusive agreements by producers to exercise market power inforeign markets, export cartels, however, are ‘restraints on trade’ officiallysanctioned by many governments who follow a ‘beggar-thy-neighbour’ policyby permitting their private firms to cartelise, as long as affected markets areoutside the country. 64Large companies merge in the developed world and consequently theirsubsidiaries and associates in developing countries too end up in newcombinations. This can create position of dominance for merging firms, havinga potential of subsequent abuse. Moreover, developing countries may also beaffected by M&A activities that take place outside their territory, and affecttheir local subsidiaries. The Zimbabwe tobacco merger case presented in Box26 provides a good example in this regard. The Boeing-McDonnell case studyEnforcing the Competition Law in Namibia: A Toolkit 77
CROSS-BORDER ISSUESBox 31: The Boeing-McDonnell MergerThe challenge by the European Commission (EC) to the merger of theworld’s largest and third-largest manufacturers of large commercial aircraft,the US firms Boeing and McDonnell Douglas, illustrates the growing trendof transnational regulation.Although the US Federal Trade Commission (FTC) cleared the deal in1997, the EC threatened to oppose it, despite a 416-2 vote in the US Houseof Representatives warning the Europeans against “an unwarranted andunprecedented interference in a US business transaction”. The EC saidthe merger would allow Boeing to increase its share of the world marketfor large commercial jet aircraft from 64 percent to 70 percent. EuropeanUnion merger laws can be applied to any business transaction that“constitutes a strengthening of a dominant position”, the EC said in a July1997 statement.The EC authorised the deal in July 1997 only after extracting concessionsfrom Boeing to increase competition. The EC had no jurisdiction over themerger of the two US aircraft makers, but it was in a position to levelcrippling fees on sales of Boeing aircraft to European airlines. Accordingto the EC, European airlines are forecast to account for almost one-third offuture demand for new aircraft orders until 2007, and Boeing andMcDonnell Douglas are positioned to capture two-thirds of the business,in the European market.Boeing’s purchase of McDonnell Douglas has left the four-nation Europeanconsortium Airbus Industrie the lone rival to Boeing in an industry thatvirtually excludes new participants because of the enormous start-up costs.In order to gain the EC’s approval for the merger, Boeing had to address anumber of European concerns. The EC contended that:• The merger would give Boeing enhanced opportunity to enter into longtermexclusive supply deals, similar to the 20-year arrangements Boeinghad with American, Delta, and Continental airlines.• The merger would broaden Boeing’s customer base from 60 percent to84 percent, allowing it to sell its products to McDonnell Douglas clients.• Boeing’s acquisition of McDonnell Douglas, the world’s number twodefense manufacturer and leading maker of military aircraft, wouldenhance Boeing’s access to publicly funded research and developmentand intellectual property.• Boeing’s acquisition of McDonnell Douglas’s patent portfolio wouldbe a further element strengthening Boeing’s dominant position.• The combination of the civil, defense, and space activities of the twocompanies would increase Boeing’s bargaining power with suppliers.78 Enforcing the Competition Law in Namibia: A Toolkit
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CONTENTSPreface ...................
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LIST OF BOXESBox 1: An Overview of
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PREFACEI am pleased to write this p
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y the Korean Fair Trade Commission
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RBPs : Restrictive Business Practic
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INTRODUCTIONOver time, the Governme
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Section 26 of the Act defines abuse
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INTRODUCTION1.3 Country BackgroundN
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ABOUT THE MARKET ECONOMYsales and p
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3. MARKET AND COMPETITION3.1 Compet
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MARKET AND COMPETITIONare able to s
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MARKET AND COMPETITION3.3 Market Sh
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MARKET AND COMPETITIONCompetition p
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RESTRICTIVE BUSINESS PRACTICESmarke
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RESTRICTIVE BUSINESS PRACTICESAccor
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RESTRICTIVE BUSINESS PRACTICES4.3 E
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RESTRICTIVE BUSINESS PRACTICESappli
Page 42 and 43: for fixing prices, will refrain fro
Page 44 and 45: Any agreement, decision and concert
Page 46 and 47: • Agreeing with competitors that
Page 48 and 49: customers might be able to force a
Page 50 and 51: 4.6 Vertical AgreementsVertical ant
Page 52 and 53: Box 12: Hungarian Book Publishers i
Page 54 and 55: RESTRICTIVE BUSINESS PRACTICESfor e
Page 56 and 57: Box 15. Manufacturer vs Manufacture
Page 58 and 59: Box 16: Tie-up Sales of Gas Stoves
Page 60 and 61: • directly or indirectly imposing
Page 62 and 63: Box 18: The Conduct of MTN of Charg
Page 64 and 65: Box 20: Predatory Practices in the
Page 66 and 67: Refusal to deal/supply is not expli
Page 68 and 69: A complaint file must include evide
Page 70 and 71: suppliers he tried said that they h
Page 72 and 73: information relating to the affairs
Page 74 and 75: A leniency policy describes the wri
Page 76 and 77: manufacturers regarding their respo
Page 78 and 79: (c) is able to appoint, or to veto
Page 80 and 81: 6.4 Control of MergersThe control o
Page 82 and 83: it may, within 30 days of the date
Page 84 and 85: The initial information filing typi
Page 86 and 87: Box 27: South African Pharma Merger
Page 88 and 89: The reasons for this recognition ma
Page 92 and 93: Boeing convinced the EC to declare
Page 94 and 95: In India, for instance, in 1994, Hi
Page 96 and 97: 7.5 Dealing with Cross-border Issue
Page 98 and 99: In this regard, it is important to
Page 100 and 101: The following sections will set out
Page 102 and 103: Box 34: Microsoft’s Abuse of Domi
Page 104 and 105: through payment of remuneration. Co
Page 106 and 107: Box 36: Importation and Retailing o
Page 108 and 109: Table 1: Different Stages of Instit
Page 110 and 111: power in a fully integrated competi
Page 112 and 113: investigate managers and employees
Page 114 and 115: COMPETITION VS INTELLECTUAL PROPERT
Page 116 and 117: Namibian Consumer’s Association (
Page 118 and 119: In addition to the above-mentioned,
Page 120 and 121: staff while gaining practical exper
Page 122 and 123: To conclude, the Competition Act is
Page 124 and 125: ENDNOTES1 Available at www.cuts-int
Page 126 and 127: 50 Mehta, Pradeep S., Competition a
Page 128: Enforcing the Competition Law in Na
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